Long term care insurance for multiple lives will be an increasingly important part of LTC insurance sales, predicted Lynn Hartung, executive vice president and chief operating officer for the long term care division of Transamerica Inc.
In a panel discussion during the Eighth Annual Intercompany Long Term Care Insurance conference here, Hartung saw several factors leading to increasing sales for multi-life LTC, including the fact that employers still need to recruit exceptional employees, and hence need to offer exceptional benefits. Moreover, workers are becoming increasingly accustomed to buying voluntary workplace benefits, a fact that also will work to boost multi-life’s share of the business, Hartung said.
Unlike group insurance, not all employees in a given workplace can qualify for a multi-life LTC policy. However, multi-life sales are suitable for groups as small as 3 people and they do offer discounts from premiums for regular individual LTC policies, noted another panelist, Beth DeMartino, assistant vice president of operations for MetLife Inc.’s individual LTC products. This opens up sales to small, often family-owned businesses. They enable producers to offer LTC policies in a variety of formats, from a strictly voluntary benefit to executive carveouts, and split-billing arrangements where employers will buy a base plan from which employees can buy up or one in which the employer pays fixed percentage of the premium for a choice of plans.
Sales for multi-life were up 7% last year compared to the year before, DeMartino noted, citing data from LIMRA International, Windsor, Conn.
Typical participation rates per employer are 1% to 10% of an eligible workforce, she said. Optimal group size ranges from 3 to 200 eligible employees, she added.
For a successful multi-life enrollment, producers should look for an employer that will encourage participation by allowing enrollment meetings during regular work hours and facilitating marketing efforts, such as mailings to employees’ homes, said DeMartino. Also, defined enrollment periods, such as 90 days, tend to encourage more enrollments than do open-ended enrollments, she added. Offering a single carrier also will be more successful than offering a choice of carriers.
The advantages of multi-life over individual policies include lower cost, with discounts ranging from 5% to 15% compared to individual policies. In a typical workforce, this would mean an individual annual premium of $1,800, vs. $2,000 for individuals, she said.
Some carriers have enhanced their multi-life products, she said, and while they still impose some limitations on how much coverage can be offered, these carriers are being more liberal on benefit levels.
Kelli Martin, client account manager for the LTC independent channel at Genworth Financial, said the successful multi-life sale requires cooperation among various areas of responsibility including sales, risk and case management and underwriting.
Eligibility requirements will also make an impact on how many employees in a given workplace can qualify for the policies, she said. Most carriers will only sell them to small employers and to employees working at least 30 hours a week. None accept coverage for less than 3 lives. They may also limit coverage to those aged 65 or younger, although that varies by carrier, she noted.
Underwriting is simple compared to individual policies: no phone health interviews, for instance. A few carriers will even offer simplified issue to some small employers, she said.
Lynn Hartung of Transamerica predicted the multi-life market will grow but that it faces big challenges, including the perception that the sale takes too long, that the application is too complicated and that the insurance is too expensive.
“It will have to get better as the industry addresses these issues,” she said. “The great thing about multi-life is you are making multiple sales with one pitch.”